In his story titled ‘Memories of Financial Crisis Fading as Risks Rise’ an AP economics writer Paul Wiseman points to several factors which banking analysts describe as ‘worrying’: — a surge in subprime auto loans for financially stretched buyers, — a US Congress recent vote to ease regulations aimed at reduction of risks to taxpayers and of course, — the unprecedented rise of Americas five biggest banks which now account for 44 percent of bank assets, compared to 38 percent in 2007… Says financial consultant Peter Koenig, former World Bank economist, based in Zurich: I think there is what we would call an impending banking crisis. A new banking crisis is looming on the horizon, I believe. And then, of course, there are many layers to this banking crisis and many elements to it. And if I may, I would like to, perhaps, address three of them, which give clear signals that something is not correct and will not be sustainable over time. The points that I would like to make are not necessarily listed in order of priority, because they are related, and make no mistake – the coming crisis, like the one in 2008, which is still lingering, is planned. And it is planned by the international banking and financial elite, which is led by Wall Street with the support of the Fed and of the European Central Bank. And, of course, the purpose of that is to make the rich financial elite richer and actually rob the common people of their savings and of their social system. That has been the case before and it is certainly happening again. And that’s what is looming. The first one of these elements I want to talk about is the derivative market. It is frightening. There currently is an estimated way over $700 trillion globally outstanding in derivatives. And some people say it is over a quadrillion. But Im conservative, I think this is probably a good enough figure, because it doesn’t really matter at this point. Even the $700 trillion is about ten times the global GDP of 72.6 trillion – an estimate of 2014. And you look at the five largest US banks, they alone, each of them has more than $40 trillion in derivatives exposure. If they decide tomorrow to call in the debt at once, or even in part, it would create the worldwide tsunami with, possibly, a result in the collapse of the Western monetary system. Today about 6 US banks control two thirds of all banking assets. And that is considerably more than it was in 2008, when the figure for the same banks was just over 40%. So, this is a big risk – the derivatives. And, of course, there is no regulation which stops the bank from calling in their debt. So, it can happen any time. If they don’t do it, perhaps, for now it is the means of self-protection. The second point is somehow related and is very similar, it is the current gold frenzy. For some strange reason, when the economy is sick, it is like a thermometer; people run to gold. You can tell when it is sick, then they run to gold, as if you could eat gold when the system collapses. That of course doesn’t happen. So, it is really not of much use other than symbolic. This happens before every crisis and it happened before 2008, and it is now happening again. But now the banking deregulation is allowing every form of speculation in the interest of profit making. It happens to an extent that is really insane.
Posted on: Fri, 19 Dec 2014 22:01:39 +0000
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